Audit 369736

Finding 2024-001 Significant Deficiency: Special Reporting - Compliance and Control Finding ALN 14.871 – Section 8 Housing Choice Vouchers Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: HUD requires Public Housing Authorities (PHAs) to submit a Form HUD-50058 within 60 days whenever a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. Condition: During our review, it was noted that the Authority’s existing controls were not consistently applied as intended, resulting in an instance of non-compliance with the reporting requirements. Cause: 1 instance was identified where a Form HUD-50058 was not submitted within the required 60-day timeframe following the participant’s exit from the program. Effect: The delay in submission may increase the risk that noncompliance with federal reporting requirements could go undetected, potentially affecting the accuracy of compliance monitoring. Questioned Costs: None. Context: A sample of 16 participants that exited out of the program identified 1 instance where the Authority did not submit the required Form HUD-50058 to HUD within the established timeframe for the participant who exited the program. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2023-001. Recommendation: We recommend that management evaluate their existing control over the timely submission of the HUD-50058 upon a participant’s exit of the program, and consider implementing additional controls such as contacting a sample of landlords each month to verify whether tenants at that location have not vacated their units without notifying the Authority. Views Of Responsible Officials: The Authority will implement a standardized documentation process for move-out reviews and create a digital log that records the date of review, the reviewer's name, and the outcome of each review. The Authority will ensure all documentation is easily accessible for future audits and internal reviews. Additionally, the Authority will establish a monthly process to contact a sample of 3-5 landlords, provide these landlords with a current tenant listing for their properties, request verification of occupancy status for each listed tenant, and document all responses and follow up on any discrepancies identified. The Authority will strengthen our move-out tracking procedures to ensure timely submission of Form HUD-50058, implement a system of alerts or reminders to prompt staff when 50058 submissions are due and conduct regular internal audits to verify the timeliness of 50058 submissions. Lastly, the Authority will provide comprehensive training to all relevant staff on the new documentation and verification processes.

Finding 2024-002 Significant Deficiency: Special Reporting – Compliance and Control Finding ALN 14.850 – Public and Indian Housing Operating Fund Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: Public Housing Authorities (PHAs) are required to enforce Housing Quality Standards (HQS) by performing inspections at initial occupancy and at least annually, and ensuring deficiencies are corrected within required timeframes. PHAs must not make housing assistance payments (HAP) for units that fail to comply with HQS and are not timely abated. Condition: During our testing of the Housing Quality Standards enforcement process, we identified 10 instances in which units failed HQS inspections, and the deficiencies were not corrected or abated in a timely manner. Cause: The PHA experienced a lapse in its enforcement of HQS inspection requirements due to internal staffing changes. Responsibility for inspections was initially handled internally by a PHA staff member who departed. There was a delay in transitioning to a third-party inspection vendor, during which follow-up on failed inspections was not conducted consistently. Effect: Units remained noncompliant with HQS enforcement standards for extended periods As a result, the PHA paid housing assistance for units that should have had rent payments abated until required repairs were complete. Questioned Costs: Rent payments within periods where abatement should have taken place resulted in $29,300 in questioned costs. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2023-002. Context: A sample of 40 HQS inspections under the 14.871 Housing Choice Voucher program revealed 10 units with failed inspections that were not followed up or abated in accordance with HUD regulations. The noncompliance occurred during a transitional period between internal and third-party inspection responsibility. Payments were not suspended or abated for units with uncorrected deficiencies, resulting in continued disbursement of HAP funds. Recommendations: We recommend that the PHA strengthen its Housing Quality Standards (HQS) inspection and enforcement process by implementing a formal tracking system to monitor inspection results and ensure timely follow-up on any deficiencies. View of Responsible Officials: A new documentation protocol will be established to provide clear proof that this process is occurring regularly. This will include date stamped review logs and signatures from responsible staff members. We will institute a monthly review of 3 to 5 initial failed inspections. The authority will conduct refresher training for all relevant staff to ensure they understand the importance of this process and their role in maintaining it. The Authority will implement an automated reminder system to alert staff when reviews and submissions are due and internal quarterly reviews will be conducted to ensure compliance with this process and to identify any potential issues early.